What is a 'Member'?

A member is a brokerage firm (or broker) that has been granted membership on an organized stock or commodities exchange. According to Encyclopedia Britannica, there are 1,366 seats on the New York Stock Exchange (NYSE) exchange, a limit that was set in 1953. 

BREAKING DOWN 'Member'

A broker-dealer or broker becomes a member of the NYSE or Nasdaq by filling out the appropriate forms and sending a check to the organization.

NYSE Membership

Any registered and new U.S.-based broker-dealer that is a member of a self-regulatory organization (SRO) and who has an established connection to a clearing firm may become a NYSE member. A broker-dealer must send the membership application, agreements and other appropriate forms to client relationship services, purchase a trading license and mail a signed copy of the applicant firm acknowledgment and the application fee to the NYSE. A broker becomes a member by filling out the appropriate NYSE form, such as a securities lending representative agreement, an equity trading license application or a one-day equity trading license application and mailing it with a check to the NYSE.

Nasdaq Member

A firm that is a FINRA, Philadelphia Stock Exchange (PHLX) or Bernie Exchange (BX) member becomes a Nasdaq member by completing the Nasdaq waive-in membership application and agreement along with the Nasdaq services agreement and submitting both with a check for $2,000. Proprietary trading firms that are members of another SRO submit a full Nasdaq membership application and agreement along with a supplemental information document, Nasdaq services agreement and written supervisory procedures checklist. All documents must be submitted with a check for $2,000 to the Nasdaq.

Advantages and Disadvantages of NYSE and Nasdaq Membership

Because of the increasing globalization of financial markets, both the Nasdaq and NYSE are establishing partnerships with other stock exchanges: the Nasdaq is partnered with the London Stock Exchange (LSE) and the Nasdaq OMX 100 Index; the NYSE is partnered with the Tokyo Stock Exchange and Euronext.

Since a Nasdaq member must meet lower minimum requirements to qualify for a listing, smaller companies are listed on a major exchange adding credibility to their products and services. The Nasdaq also has lower listing fees. For example, the Nasdaq listing fee for an initial public offering (IPO) is half that of the NYSE. In addition, the Nasdaq features all-electronic trading with faster execution, which is increasingly the norm on worldwide trading exchanges. The NYSE still uses specialists working on the floor buying and selling stocks.

However, traders consider Nasdaq members to be less established and less financially sound. Since the NYSE is 200 years older and considered more prestigious, companies such as Nortel and E*Trade have moved from the Nasdaq to the NYSE.

RELATED TERMS
  1. Allied Member

    An allied member is a person who is not a member of the New York ...
  2. Non-Member Trader

    A non-member trader is someone who does not have trading privileges ...
  3. Listed Security

    A listed security is a financial instrument that is traded through ...
  4. Seat

    A seat refers to a membership of a stock exchange, which enables ...
  5. NASDAQ Global Select Market Composite

    NASDAQ Global Select Market Composite is a market capitalization-weighted ...
  6. Primary Listing

    A primary listing is the main stock exchange, such as the New ...
Related Articles
  1. Investing

    Why Do Companies Choose NASDAQ for Their IPO?

    The NYSE is known for its prestige so why do some companies opt to list on the NASDAQ instead?
  2. Investing

    How Nasdaq Continues To Innovate

    For centuries, a stock market was a physical arena where buyers and sellers traded shares. Then the NASDAQ opened and changed everything.
  3. Insights

    How The NYSE Makes Money

    We examine how the New York Stock Exchange, the leading US stock exchange, makes money.
  4. Investing

    Why Companies Change Exchanges

    Companies don't elect to leave an exchange so much as they're asked. Find out why.
  5. Insights

    The Birth of Stock Exchanges

    Learn about the evolution of stock exchanges, from the Venetian states to the British coffeehouses, and finally to the NYSE.
  6. Investing

    Stock Exchanges Around The World

    We tell you about five of the most popular stock exchanges from around the globe.
  7. Investing

    Opko Health Is Jumping to the Nasdaq

    In a fairly rare instance of market-hopping, biopharma company Opko Health (NYSE: OPK) is soon to be listed on a new bourse. The company announced that its shares will move from Intercontinental ...
  8. Investing

    NYSE Glitch Halts Trading in 199 Tickers (ICE)

    A technical glitch described as a "critical issue" has halted trading in 199 tickers on the New York Stock Exchange.
  9. Investing

    How to Track Costco's Performance

    Costco (NASDAQ: COST) has a unique business model. Even though its warehouses generate an average of $168 million in sales each year, it makes no money from the process of hawking goods and ...
RELATED FAQS
  1. What are the advantages and disadvantages of listing on the Nasdaq versus other stock ...

    Discover some of the primary advantages and disadvantages that exist for companies listed on the Nasdaq exchange rather than ... Read Answer >>
  2. How do I invest in the Nasdaq or the NYSE? Is it even possible? Would I want to? ...

    The Nasdaq and the NYSE are stock exchanges that trade securities. Nasdaq stands for National Association of Securities Dealers ... Read Answer >>
  3. What's the difference between a Nasdaq market maker and a NYSE specialist?

    What's the main difference between a specialist and a market maker? Not much. Both the New York Stock Exchange (NYSE) specialist ... Read Answer >>
  4. What does a New York Stock Exchange membership entail, and why is it known as 'owning ...

    Owning a seat on the NYSE enables a person to trade on the floor of the exchange, either as an agent for someone else or ... Read Answer >>
  5. Where can I find information about pre- and after-hours trading on the NYSE and the ...

    The first place investors should look to find information about pre-market and after-market activity is their brokerage account's ... Read Answer >>
Trading Center